Oil Prices Tank Despite Large Crude Draw

As oil markets hold their breath for OPEC+’s announcement of the final production cuts to take place starting next year, the Energy Information Administration served a nice surprise to oil bulls by reporting an inventory draw in crude oil of 7.3 million barrels for the week to November 30.

The report came two days after the American Petroleum Institute disappointed bulls with an estimated inventory build of 5.36 million barrels for the same week, pushing WTI prices down closer to US$50 a barrel.

The EIA said refineries processed 17.5 million barrels of crude daily last week, producing 9.7 million bpd of gasoline and 5.6 million bpd of distillate fuel. A week earlier, refineries processed 17.6 million bpd, with gasoline production at 10.2 million bpd and distillate fuel production at 5.5 million bpd.

Gasoline inventories last week added 1.7 million barrels, with distillate inventories rising by 3.8 million barrels. This compared with an 800,000-barrel decline in gasoline inventories and a 2.6-million-barrel rise in distillate fuel inventories a week earlier.

Oil has been on the slide this week, pressured by uncertainties surrounding this round of OPEC+ production cuts and the surprise announcement by Qatar that it was leaving the cartel starting in January. There has been speculation that Iraq, OPEC’s second-largest producer may follow as it cannot really afford to reduce its production.

A stock market dip accelerated the oil price drop, but trading was not particularly dynamic ahead of the OEPC meeting in Vienna. The cartel will release a statement later in the day, but Russia has yet to have its say, which will take place tomorrow. Its position is considered once again the maker or breaker of the cut deal, although the prevailing mood is positive, with a high degree of certainty that an agreement to reduce crude oil supply will be reached.